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Non-Tech : DRIPs -- Dividend reinvestment plans
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To: Rick Kunz who wrote (171)2/12/1997 7:50:00 PM
From: Annette Hebble   of 263
 
Rick,

Capstead is a REIT (real investment trust), so the distribution is a function of its annual earnings.

REITs have to distribute their earnings to be classified as REITs and avoid federal income taxes at the corporate level. Typically, good REITs have high yields due to their special "tax status." Capstead's yield is at the high end of this range. I own some other DRIPs (Motorola, and Home Deport) that have insignificant yields, so I don't mind the tax consequences of having a higher yield DRIP.

Capstead currently is selling newly issued shares to DRIP investors. Another DRIP i own, Noram Energy did the same thing and the purchase price of shares acquired were typically towards the low end of the daily range. I hope it will be the same for Capstead. A purchase price with a low spread and no fees adds to the return.

Any questions you can come up with, please ask. It makes me think about the investment thuroughly.

AH
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